In 1999, the State Legislature significantly modified the annexation laws in Texas. The changes significantly limited a municipality’s options for conducting general purpose annexations and expanded a municipality’s ability to annex for limited purposes through a Strategic Partnership Agreement with utility districts. The City can then charge a sales tax and provide specified, limited services to the area. The City cannot levy a property tax in areas annexed for limited purposes.
Since the inception of the strategic partnership agreements in 2000, the City of Houston has executed such agreements with 237 utility districts. Without exception, these agreements have been the result of a request by the district itself, and state law requires that the district approve the agreement prior to City Council’s consideration of it. The City's practice has been to periodically send a general announcement to area districts, and those that are interested respond. When a district enters into an agreement with the City for the first time, a new strategic partnership ordinance is created. Subsequent ordinances between the same district and the City to change boundaries or contract terms are approved as amendments to existing agreements.
These agreements have created net revenue of approximately $51 million to the City in 2015 and, because the split is usually 50/50, these agreements have led to around $51 million being redistributed back to the community through the utility districts. While the City does not monitor the expenditures of each district, most districts use their funds to supplement existing district services, which effectively lowers utility and tax rates. In some instances, districts have used the proceeds to fund regional parks and other public amenities. Through these agreements, the City has maintained a good working relationship with the utility districts in the Houston area.
The City has received a request from the Kingsbridge MUD to amend their existing SPA. Public hearings are required in accordance with Section 43.075 of the Texas Local Government Code which states:
Before the governing body of a municipality or a district adopts a Strategic Partnership Agreement, it shall conduct two public hearings at which members of the public who wish to present testimony or evidence regarding the proposed agreement shall be given the opportunity to do so.
The amendment proposed to the Kingsbridge MUD SPA will add to the existing agreement two commercial properties, a Whataburger and a Home Depot outlet. There is no population located in this territory. In addition, the City will levy a one percent sales tax and the taxes collected in the areas will be divided evenly between the City and the District.
The hearings will be held on July 26, 2017 and August 2, 2017 in City Council chambers.
_________________________________
Patrick Walsh P.E.
Director
Planning and Development Department